REX to transition to ATRs, start domestic jet ops
Mick, I suggested that the route to Orange was not profitable so why would Q put a Dash in there? when Joyce claims q is bleeding cash at the rate of $40m a week? Q has not operated into there before, so with reduced passenger numbers there is no way either of them can make a profit from that route at this moment in time so whats the game? is it so QANTAS can bleed even more noney (their claim not mine) so that they can get a hand out as well. I have no problem if they get a handout as long as its not used to get rid of competition. And before you say it, Q didn't go to Orange before .
COVID-19 intervened. They're now starting in two weeks time using Q200s presumably in the expectation that demand will rebound to pre-coronavirus levels.
You're suggesting that the route won't be profitable for QF, their planners disagree, they clearly believed back in February that the service was feasible. We'll have to wait and see.
Last edited by MickG0105; 6th Jul 2020 at 04:14. Reason: Re-format
If Rex are only averaging 40 pax a week on Sydney-Orange where are the other 500-750 revenue passengers who fly out of Orange on a weekly basis flying to and who are they flying with? They can't all be on FlyCorporate's twice weeklies to Essendon and Brisbane.
The Bureau of Infrastructure, Transport, Regional Development and Communications passenger activity stats showed that roughly 41,000 commercial RPT passengers flew out of Orange in 2019. The January 2020 numbers were 4,800 for the month or roughly 77 pax each day in each direction.
The Bureau of Infrastructure, Transport, Regional Development and Communications passenger activity stats showed that roughly 41,000 commercial RPT passengers flew out of Orange in 2019. The January 2020 numbers were 4,800 for the month or roughly 77 pax each day in each direction.
Do the maths on that and you’ll understand why Rex is upset. QF are taking a route that is most likely mildly profitable for Rex and adding extra capacity. Result? Both airlines will wear a loss until the other gives up, then the people of Orange go back to a monopoly....
I had an explanation but deleted it because most of the comments on here are clearly biased and can’t listen to a reasonable argument (didn’t expect anything less from Pprune TBH).
QF has history of unfair competition
For those of you saying Rex is ‘crying wolf’ or ‘having a whinge’...
Despite their issues they’ve managed to build a reasonably successful regional airline covering a lot of routes to small for QF/VA. Look at the last 5-10 years to see how many regional airlines have vanished that covered the same market to find your explanation of why that is a pretty good accomplishment. O’Connor, Vincent’s, Skytrans MK1, Brindabella/Aeropelican, Air South, Macair, the list goes on and on.
A bit of history for all of you.
Back when Rex started services ex TSV under the QLD govt subsidised routes, they decided to add TSV-MKY to their network.
QF responded by dropping fares by 30% and increasing capacity by 30-40%. They actually had to reduce services to other monopoly destinations to do this (Horn Island and Weipa). Rex lasted 9 months under these conditions before giving up. So the residents of NQ (Weipa/Horn Island) had to suffer under reduced frequency and higher fares while QF snuffed our a competitor somewhere else. PLUS the residents of TSV and MKY got cheap fares for a limited time, then back to high fares for you!!
Reality is both sides will take advantage of their respective strengths at various points in time.
QF have a history of ‘poaching’ profitable regional routes once another operator has done the hard work and built it up. Airnorth has expressed this exact concern about the DN-TSV route. Macair had QF move in on the TSV-ISA route. I’m sure there’s more than that.
Rex meanwhile know what it takes to run a regional network with slim margins. The regular news articles about their issues with regional councils have a lot of merit. Yes Rex seem to be aggressive but airport charges have a direct effect on the fares the passengers pay. I have heard of these issues playing out (through workmates that are dealing directly with councils) and some of the things the councils try to pull shows the massive lack of understanding in many regional councils.
Rex are not perfect by any measure, but they know their market and what it takes to work. I’d like to see all the armchair critics on here build a company that looks anything like that.
Despite their issues they’ve managed to build a reasonably successful regional airline covering a lot of routes to small for QF/VA. Look at the last 5-10 years to see how many regional airlines have vanished that covered the same market to find your explanation of why that is a pretty good accomplishment. O’Connor, Vincent’s, Skytrans MK1, Brindabella/Aeropelican, Air South, Macair, the list goes on and on.
A bit of history for all of you.
Back when Rex started services ex TSV under the QLD govt subsidised routes, they decided to add TSV-MKY to their network.
QF responded by dropping fares by 30% and increasing capacity by 30-40%. They actually had to reduce services to other monopoly destinations to do this (Horn Island and Weipa). Rex lasted 9 months under these conditions before giving up. So the residents of NQ (Weipa/Horn Island) had to suffer under reduced frequency and higher fares while QF snuffed our a competitor somewhere else. PLUS the residents of TSV and MKY got cheap fares for a limited time, then back to high fares for you!!
Reality is both sides will take advantage of their respective strengths at various points in time.
QF have a history of ‘poaching’ profitable regional routes once another operator has done the hard work and built it up. Airnorth has expressed this exact concern about the DN-TSV route. Macair had QF move in on the TSV-ISA route. I’m sure there’s more than that.
Rex meanwhile know what it takes to run a regional network with slim margins. The regular news articles about their issues with regional councils have a lot of merit. Yes Rex seem to be aggressive but airport charges have a direct effect on the fares the passengers pay. I have heard of these issues playing out (through workmates that are dealing directly with councils) and some of the things the councils try to pull shows the massive lack of understanding in many regional councils.
Rex are not perfect by any measure, but they know their market and what it takes to work. I’d like to see all the armchair critics on here build a company that looks anything like that.
QF have a history of ‘poaching’ profitable regional routes once another operator has done the hard work and built it up.
No body I think has anything against Rex doing its thing in the bush. It is a hard market but they seem to keep on going, well done to them. The issue which keeps falling on deaf ears to the faithful few here is that they cried they were going to go bankrupt, got a large proportion of government assistance and THEN said yeah we can get enough money for 10 jets and the infrastructure to do the triangle which will cost more than the entire Rex organisation now. That is where issue is. If they give all the TAXPAYERS money back and still do it, well hats of to them.
Sighs deeply...Qantas,Jetstar and VA are not expanding but retrenching 1000s. They are not buying additional aircraft, Rex is talking about 10 jets probably one jet is worth what the cost of the clapped out 340 fleet is.
Join Date: Sep 2011
Location: Unfortunately not the Orient
Posts: 387
Likes: 0
Received 88 Likes
on
32 Posts
As far as I'm aware, the government minimum network for capital city ops has stopped. Regional is different and ends at the end of September. Arnold, REX is proposing to use the government subsidy to start another airline (for want of a better definition) after crying poor and telling the whole country they were going to go broke. That was, and still is a LIE.
QF and JQ are just doing what they did before covid. Nothing more, but certainly less. And now REX has insisted that the government strip them of any subsidy because they have the gall to fly a previously monopolised route. Personally, I think it will make it worse, the subsidies stop in a couple of months anyway and AJ is ruthless.
I for one don't believe for a second they will actually press ahead with the jet ops, they know it would be suicide, but that's not the point at the moment.
QF and JQ are just doing what they did before covid. Nothing more, but certainly less. And now REX has insisted that the government strip them of any subsidy because they have the gall to fly a previously monopolised route. Personally, I think it will make it worse, the subsidies stop in a couple of months anyway and AJ is ruthless.
I for one don't believe for a second they will actually press ahead with the jet ops, they know it would be suicide, but that's not the point at the moment.
Please stop using that word. It shows such an self entitled mentality that obviously runs through the entire business. By definition no one can poach pilots or air routes in Australia it is impossible. For something to be poached you have to have ownership. If a Pilot wants to resign and go to a operator that pays a higher salary it is not poaching. Same with air routes. If QF want to fly anywhere that is not regulated they can do that. It is not poaching.
You can argue ‘that’s competition’ and hopefully it gives a better outcome for the consumer. But it can also be highly anti competitive, stopping a smaller competitor from growing to the point they pose a serious threat. The Tech giants (FB/Apple/Google) have all been accused of similar anti competitive actions in that market.
Also RE: the other comments. ‘Rex will go bankrupt’. They weren’t wrong and without government assistance they would have. Doesn’t take a genius to look around the world and realise that the airlines without government support are unlikely to survive.
Rex also said ‘we won’t transport COVID tests’. Again not wrong. Without government support they would have shut down their network. Can’t carry tests without a network.
Rex also called ‘force majure’ on the QLD network. This is partly subsidised and probably comes with a minimum frequency in the contract. Again if the pax numbers drop and they’re not profitable anymore, why should Rex continue to fly that route?
The government has announced various support packages for the aviation industry.
Domestic Aviation Network Support. $165 million ONLY for VA/QF. Subsidy to operate minimum domestic services.
Regional Aviation Support Network. $198 million to cover minimum services a week across ALL regional RPT networks. $100 million of this is set aside for direct assistance to any regular RPT operator (there are 12 by the way, I’d argue REX is the largest of these 12...).
Australian Airline Financial Relief Package. $715 million which covers Airservices charges. Basically only works if you’re flying. But also gives the most $$ to the operator with the biggest network (probably QF).
There’s also the freight subsidy to ensure food products can get to market overseas.
So QF/VA get access to upto $165 million between them. Rex have to share $98 million between 12 companies (of which they are by far the largest). The direct assistance ($100 million) to regional airlines is arguably crucial to their survival, they’re probably the weakest financially vs the majors.
I’m going to take a guess and say if no assistance had been offered by the Federal Govt, Rex would have shutdown their entire network and pushed all their staff on to JobKeeper. They own almost all the Saab’s outright and had a reasonable cash reserve. So they could have held on for a while. Maybe they could have also refinanced some for $30 million in cash to keep going. This would have resulted in a far weaker company at the end of COVID. Plus the other 11 regional RPT airlines would have also been under significant stress, most likely some would have gone under.
The assistance packages are definitely ‘tailored’ towards different parts of the industry. But so they should be. QF made $1 billion profit, they have substantial assets to survive with and a dominant market position. VA were screwed before all this began. Regional airlines run older aircraft with thin margins and lower passenger numbers. They have less ‘room to manoeuvre’ given the current conditions.
Remember ALL airlines have access to JobKeeper to at least retain their employees. How they’ve organised all their other assets (cash/aircraft/etc) will determine how they survive this crisis.
Last edited by aviation_enthus; 6th Jul 2020 at 08:16.
DANS continues to 30th September.
RANS continues to 31st December
https://minister.infrastructure.gov....ion-industry-0
Quote from a late March media release:
(note the continuing to work with industry, this isn’t over yet folks, Victoria this week is a perfect reminder)
“Currently there are around 12 commercial regional airlines – aside from the Virgin Australia and Qantas groups – which operate regular scheduled passenger services across Australia. While the $198 million to support the network will assist airlines, there are critical standing costs for each airline’s safety function, regulatory compliance and minimum operational capability to be met.
An additional $100 million is available to provide direct financial support to smaller regional airlines during this unprecedented downturn in aviation activity should it be needed.
Airlines, contracted aero-medical providers and a range of other essential service providers can apply for consideration and subject to financial analysis, be eligible for assistance on a month-by-month basis through to 30 September 2020, where there is a demonstrated need.
The Government recognises all areas of the aviation industry are feeling the impacts of the current COVID-19 crisis. While the $100 million package is directed at smaller regional airlines, the Government is continuing to work with the larger stakeholders such as Qantas and Virgin Australia groups and it has already announced industry-wide support through a $715 million package of assistance last week.”
RANS continues to 31st December
https://minister.infrastructure.gov....ion-industry-0
Quote from a late March media release:
(note the continuing to work with industry, this isn’t over yet folks, Victoria this week is a perfect reminder)
“Currently there are around 12 commercial regional airlines – aside from the Virgin Australia and Qantas groups – which operate regular scheduled passenger services across Australia. While the $198 million to support the network will assist airlines, there are critical standing costs for each airline’s safety function, regulatory compliance and minimum operational capability to be met.
An additional $100 million is available to provide direct financial support to smaller regional airlines during this unprecedented downturn in aviation activity should it be needed.
Airlines, contracted aero-medical providers and a range of other essential service providers can apply for consideration and subject to financial analysis, be eligible for assistance on a month-by-month basis through to 30 September 2020, where there is a demonstrated need.
The Government recognises all areas of the aviation industry are feeling the impacts of the current COVID-19 crisis. While the $100 million package is directed at smaller regional airlines, the Government is continuing to work with the larger stakeholders such as Qantas and Virgin Australia groups and it has already announced industry-wide support through a $715 million package of assistance last week.”
Last edited by aviation_enthus; 6th Jul 2020 at 08:15.
QF have a large international network (I think around 25% of their revenue). None of that flying will be returning any time soon. Plus it looks like the market will be smaller when it does. So they have to make people redundant simply cause they don’t need them anymore.
VA has been badly managed for the last 5-10 years. That aside, they also have international ops, so I’d argue even if they were in a better position financially, they’d still be making staff redundant.
Air NZ is the same. The domestic network may return to 80% capacity but the rest won’t = redundancies.
I’ll bet if Rex had international they’d be doing the same..... In fact there’s nothing to say they won’t have to make staff redundant in the future.
Ozbiggles, (sighs deeply) you do realize of course that MOST of REX staff are stood down on jobkeeper, dont know what will happen in September, no different than the other airlines
